Many marketers actively avoid financial accountability. They’re not interested in having the uncomfortable conversation: they will feel exposed. So they blather on about some brand mumbo-jumbo, rather than talk about what really counts in business: ROI.
In my conversations with CEOS and other top executives, this era is coming to end. “We want information that shows us which type of marketing could be more effective,” said Bob Shearer, chief financial officer of VF Corp., in a Wall Street Journal article on May 20. VF is a multibillion company behind clothing and footwear brands such as Vans, Lee, Timberland and The North Face. Mr. Shearer wants more “science” in measuring payback on marketing investments.
I recall one executive stating that “marketing is completely in the dark” about business. However this does not need to be the case and here are 5 ways to shed light:
1. Problem: Marketers Focus on Marketing
One of the top business complaints about marketing is that it tends to focus on…marketing. Marketers think about things that are important only to marketing, such as campaign performance. This creates a disconnect and mistrust in business.
Solution: Focus on Enterprise Objectives
Marketers need to increasingly shift their thinking to enterprise objectives. “What is the company trying to do in business? What are the company’s financial goals?” And then plan accordingly.
2. Problem: Tactical Approach
Marketers usually take a bottoms-up, tactical view. They look at impressions, reach, number of emails, etc. Sadly these don’t necessarily have any sort of impact on top-level goals.
Solution: Strategic Approach
The better way is a top-down, strategic approach. Whether a company is public or private, the top objective is invariably bottom-line financial growth. Focusing on the top, then working down, always creates more value, and will elevate marketing’s position.
3. Problem: Focus on Marketing Activities
Marketers are doers, and often mistake their activities for their business. “My job is pumping out emails.” “My job is social impressions.” Sadly, pumping out emails doesn’t always make money.
Solution: Holistic Focus
It’s better to take holistic view of how marketing fits into the whole. “How can marketing help sell what we manufacture/deliver to customers?”
4. Problem: Focus on Spend
When considering finances, marketers usually think of themselves in terms of spending. This makes them a cost center. This is why they’re always among the first to downsize in lean times.
Solution: Focus on Investment
Marketers needs to shift their focus to investing, rather than spending. When you make an investment, you invariably keep your eye on the prize: a financial return. That makes marketing a profit center. Start with the company’s financial objectives, then reverse engineer: what investment is required to deliver the company’s financial goals?
5. Problem: Focus on Efficiency
Another complaint about marketers is they focus on efficiency. How can we make our work more efficient: more reach, more frequency, more clicks, etc.
Solution: Focus on Effectiveness
An emphasis on effectiveness is much more valuable. Marketing needs to integrate more with the rest of the enterprise. How can we make our work have more of an impact, and help achieve enterprise objectives?
Conclusion: The writing is on the wall: marketing – as it was – has reached a point of diminishing returns. It’s difficult to move the needle more.
But you change, and create more value from marketing by focusing on ROI. One of our clients discovered that if they spend, say, $5 million, they get $10 million in upsell, for an ROI of 100%. That is increasingly how marketers need to think.